Devon Energy Production Company, L.P. v. KCS Resources, LLC ( 2014 )

Affirmed in Part and Reversed and Remanded in Part and Majority and
Concurring and Dissenting Opinions filed October 30, 2014.
In The
Fourteenth Court of Appeals
NO. 14-13-00348-CV
DEVON ENERGY PRODUCTION COMPANY, L.P., Appellant
V.
KCS RESOURCES, L.L.C., Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Cause No. 2010-15225
CONCURRING AND DISSENTING
OPINION
The trial court correctly concluded that it lacked subject-matter jurisdiction
over both the plaintiff’s claims under the Texas Declaratory Judgments Act and the
defendant’s counterclaim for attorney’s fees under that statute for defending
against the plaintiff’s claims. Therefore, this court should affirm the trial court’s
judgment in its entirety.
Recovery of Attorney’s Fees under Texas Civil Practice and Remedies Code
section 37.009
Appellant/plaintiff Devon Energy Production Company, L.P. sued
appellee/defendant KCS Resources, L.L.C. asserting claims for declaratory relief
under the Texas Declaratory Judgments Act.1 KCS counterclaimed, asserting a
variety of claims, but KCS later nonsuited all of them except its claim for
reasonable and necessary attorney’s fees incurred as a result of Devon’s
declaratory-judgment claims. KCS sought to recover these fees only under Texas
Civil Practice and Remedies Code section 37.009, and there is no other apparent
basis on which KCS might recover these fees.2 The trial court determined that it
lacked subject-matter jurisdiction over both Devon’s declaratory-judgment claims
and KCS’s section 37.009 claim and therefore dismissed all claims without
prejudice for lack of subject-matter jurisdiction.
In determining parties’ entitlement to attorney’s fees, Texas courts follow
the American Rule, which provides that litigants may recover attorney’s fees only
if a statute or contract specifically provides for such a recovery.3 Thus, in
determining whether a party may recover attorney’s fees, Texas courts must
interpret and apply the statute or contract under consideration, rather than crafting
judge-made rules to supply the legal standard to be applied.4 In today’s case, the
only possible authority under which KCS might recover attorney’s fees is section
37.009.
1
See Tex. Civ. Prac. & Rem Code Ann. § 37.001, et seq. (West 2014).
2
See id. § 37.009 (West 2014). Unless otherwise specified all statutory references in this
opinion are to the Texas Civil Practice and Remedies Code.
3
See Epps v. Fowler, 351 S.W.3d 862, 865 (Tex. 2011).
4
See id. This principle does not apply to the extent that a party seeks to recover attorney’s fees
as damages under a particular claim. KCS does not seek to recover attorney’s fees as damages.
2
To recover attorney’s fees under Texas Civil Practice and Remedies Code section
37.009, the claimant must do so in a proceeding under the Texas Declaratory
Judgments Act, and a claim for fees is not such a proceeding.
Section 37.009, entitled “Costs,” provides in its entirety that “[i]n any
proceeding under this chapter, the court may award costs and reasonable and
necessary attorney’s fees as are equitable and just.”5 We are to review the trial
court's interpretation of applicable statutes de novo.6 In interpreting a statute, our
objective is to determine and give effect to the Legislature’s intent.7 If possible,
we must ascertain that intent from the language the Legislature used in the statute
and not look to extraneous matters for an intent the statute does not state. 8 If the
meaning of the statutory language is unambiguous, we adopt the interpretation
supported by the plain meaning of the provision’s words.9 We are not to engage in
forced or strained construction; instead, we must yield to the plain sense of the
words the Legislature chose.10
A proceeding under the Declaratory Judgments Act is for the purpose of
determining one or more requests for declaratory relief under that statute.11 In such
a proceeding the trial court has discretion to award reasonable and necessary
attorney’s fees as are equitable and just.12 But, a request or claim for reasonable
and necessary attorney’s fees is not independent of the declaratory-judgment
claims asserted in the trial court; rather, the attorney’s fees awarded must relate to
5
Tex. Civ. Prac. & Rem Code Ann. § 37.009 (emphasis added).
6
See Johnson v. City of Fort Worth, 774 S.W.2d 653, 655B56 (Tex. 1989).
7
See Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000).
8
Id.9
St. Luke’s Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex. 1997).
10
See id.11
See Tex. Civ. Prac. & Rem Code Ann. § 37.001, et seq.
12
See id. § 37.009.
3
those claims.13 Under the unambiguous language of the Declaratory Judgments
Act, reasonable and necessary attorney’s fees under section 37.009 must be
awarded in a proceeding under that statute and a request for such fees, standing
alone, is not a declaratory-judgment proceeding.14
Because the trial court lacked subject-matter jurisdiction over the plaintiff’s
declaratory-judgment claims, the proceedings under the Declaratory Judgments
Act were void, and there are no proceedings that would permit an award of
attorney’s fees under Texas Civil Practice and Remedies Code section 37.009.
The trial court correctly ruled that it lacked subject-matter jurisdiction over
Devon’s declaratory-judgment claims; therefore, the proceedings relating to these
claims are void.15 Because there are no such proceedings, there is no basis for
awarding KCS reasonable and necessary attorney’s fees under section 37.009.
KCS’s claim for these attorney’s fees was ancillary to Devon’s claims and the trial
court lacked subject-matter jurisdiction over Devon’s claims. Thus, the trial court
did not err in dismissing all of these claims for lack of subject-matter jurisdiction.16
The issues raised by KCS’s cross-appeal have not been addressed by a
precedent from the Supreme Court of Texas or from this court, and three sister
courts of appeals have reached the opposite conclusion. Without citing any
authority in support of the proposition, the sister courts determined that the absence
13
See Rapid Settlements, Ltd. v. Settlement Funding, LLC, 358 S.W.3d 777, 786–87 (Tex.
App.—Houston [14th Dist.] 2012, no pet.).
14
See Tex. Civ. Prac. & Rem Code Ann. § 37.001, et seq.; Tanglewood Homes Ass’n, Inc. v.
Feldman, 436 S.W.3d 48, 68–69 (Tex. App.—Houston [14th Dist.] 2014, no pet. h.); Rapid
Settlements, Ltd., 358 S.W.3d at 786–87.
15
See State v. PR Investments, 180 S.W.3d 654, 664, n.8 (Tex. App.—Houston [14th Dist.]
2005) (en banc), aff’d, 251 S.W.3d 472 (Tex. 2008); Smith v. Gulf States Utilities, 616 S.W.2d
300, 302 (Tex. Civ. App.—Houston [14th Dist.] 1981, writ ref’d n.r.e.).
16
See PR Investments, 180 S.W.3d at 664, n.8; Tanglewood Homes Ass’n, Inc., 436 S.W.3d at
68–69.
4
of subject-matter jurisdiction over claims from filing through dismissal does not
affect the nature of these claims.17 But, the lack of jurisdiction is fundamental, and
its absence has a material effect on both the trial court proceeding and the analysis
of the issue on appeal. The lack of subject-matter jurisdiction over Devon’s
declaratory-judgment claims from the moment of filing until the moment of
dismissal makes the proceedings void.18
Various federal courts of appeals have held in an analogous situation that a
trial court’s lack of subject-matter jurisdiction over claims under the Employee
Retirement Income Security Act (“ERISA”) means that the court also lacks
subject-matter jurisdiction over claims seeking attorney’s fees under a statute
giving trial courts discretion to award attorney’s fees in an ERISA action.19 Under
this line of cases, in the absence of subject-matter jurisdiction over the ERISA
claims, there is no ERISA “action” in which attorney’s fees could be awarded
under the statute.20 These cases provide persuasive authority in support of the
conclusion that the trial court lacked subject-matter jurisdiction over KCS’s claim
seeking attorney’s fees under section 37.009. 21
17
See Feldman v. KPMG LLP, —S.W.3d—,—, No. 01-12-00934-CV, 2014 WL 1745887, at *7
(Tex. App.—Houston [1st Dist.] May 1, 2014, no pet. h.); Zurita v. SVH-1 Partners, Ltd., No.
03-10-00650-CV, 2011 WL 6118573, at *8 (Tex. App.—Austin Dec. 8, 2011, pet. denied)
(mem. op.); Castro v. McNabb, 319 S.W.3d 721, 735–36 (Tex. App.—El Paso 2009, no pet.).
18
See PR Investments, 180 S.W.3d at 664, n.8; Gulf States Utilities, 616 S.W.2d at 302.
19
Cliburn v. Police Jury Ass’n of Louisiana, Inc., 165 F.3d 315, 316 (5th Cir. 1999) (per
curiam); W.G. v. Senatore, 18 F.3d 60, 64–65 (2d Cir. 1994); Laborers Local 938 Joint Health &
Welfare Trust Fund v. B.R. Starnes Co. of Florida, 827 F.2d 1454, 1458 (11th Cir.1987) (per
curiam).
20
Cliburn, 165 F.3d at 316; W.G., 18 F.3d at 64–65; Laborers Local 938 Joint Health & Welfare
Trust Fund, 827 F.2d at 1458.
21
Cliburn, 165 F.3d at 316; W.G., 18 F.3d at 64–65; Laborers Local 938 Joint Health & Welfare
Trust Fund, 827 F.2d at 1458.
5
KCS cites two cases from the Supreme Court of Texas, Hallman and
Camarena,22 to support its position. In the Camarena case, which did not involve
section 37.009, the high court held that a live issue still existed between the parties
as to whether the trial court erred in denying the plaintiff’s request for attorney’s
fees even though it granted the plaintiffs the other relief they requested. 23 The
Camarena court held that, although the issues regarding the other relief granted in
the trial court’s judgment later had become moot, the issue as to whether the trial
court erred in denying the plaintiff’s request for attorney’s fees was not moot.24
Significantly, in Camarena, the trial court had subject-matter jurisdiction over the
claims from filing through the initial rendition of judgment, and the fee request
denied by the trial court addressed attorney’s fees during the period in which the
trial court had subject-matter jurisdiction.25 The Camarena court did not address
whether the plaintiffs were seeking fees for the time period after the other issues
became moot or whether the trial court had jurisdiction over such a request, and
this silence does not create any precedent on this issue.26 In any event, there is a
significant difference between a case in which the trial court never has subject-
matter jurisdiction over the plaintiff’s claims and a case in which the trial court lost
jurisdiction over the claims after rendition of judgment.
22
See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005); Camarena v. Texas
Employment Comm’n, 754 S.W.2d 149, 150–51 (Tex. 1988).
23
See Camarena, 754 S.W.2d at 150–51.
24
See id.
25
See id.
26
United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37–38, 73 S.Ct. 67, 69, 97 L.Ed.
54 (1952) (concluding that in deciding its jurisdiction, a court is not bound by a prior exercise of
jurisdiction in a case in which the jurisdictional issue was not questioned, but was passed
over sub silentio); Gantt v. Gantt, 208 S.W.3d 27, 30, n.4. (Tex. App.—Houston [14th Dist.]
2006, pet. denied) (same).
6
The Hallman case involved an appeal from the trial court’s denial of
attorney’s fees requested under section 37.009 in an insurance dispute in which
other issues in the case became moot while the case was pending in the Supreme
Court of Texas.27 The Hallman court held that the issue as to whether the insurer
had a duty to defend was still a live controversy because it would determine
whether a remand was necessary for the trial court to consider whether to change
its denial of the fee request in light the new prevailing party on that issue. 28 Even
presuming that the insured was seeking attorney’s fees for the period after the
issues became moot, the case is not supportive of Devon’s position because the
Hallman court did not address whether the trial court had jurisdiction over such a
request, and this silence does not create any precedent on this issue.29
In Galveston County Commissioners’ Court v. Lohec, this court reversed the
trial court’s ruling on the merits of declaratory-judgment claims, held that one
plaintiff lacked standing, and remanded to the trial court to consider the
defendant’s request for attorney’s fees under 37.009.30 The Supreme Court of
Texas disagreed with this court’s disposition regarding the declaratory relief,
reversed this court’s judgment, and rendered judgment, so the case was never
remanded.31 In Lohec, no party raised the issue of whether the trial court had
jurisdiction over the defendants’ requests for attorney’s fees against the plaintiff
who lacked standing, and this court did not opine on the matter.32 The Lohec court
27
See Hallman, 159 S.W.3d at 642.
28
See id.
29
L.A. Tucker Truck Lines, Inc., 344 U.S. at 37–38, 73 S.Ct. at 69; Gantt, 208 S.W.3d at 30.
30
See Galveston County Commissioners’ Court v. Lohec, 814 S.W.2d 751, 754–55 (Tex. App.—
Houston [14th Dist.] 1991), rev’d on other grounds, 841 S.W.2d 361 (Tex. 1992).
31
See Lohec v. Galveston County Commissioner’s Court, 841 S.W.2d 361, 366 (Tex. 1992).
32
See Lohec, 814 S.W.2d at 754–55
7
did not address whether the trial court had jurisdiction over such a request, and the
court’s passing over this issue in silence does not create any precedent. 33 Thus, the
issue appears to be one of first impression in this court. Instead of following the
sister courts of appeals, this court instead should look to the plain language of the
statute and analogous federal authority and hold that the lack of subject-matter
jurisdiction precludes an award of attorney’s fees under section 37.009.
Conclusion
The Texas Legislature has the authority and know-how to enact a statute
providing that a trial court may award reasonable and necessary attorney’s fees to a
defendant who succeeds in having a plaintiff’s declaratory-judgment claims
dismissed for lack of subject-matter jurisdiction. To date, the Texas Legislature
has not done so. The trial court correctly ruled that it lacked subject-matter
jurisdiction over Devon’s declaratory-judgment claims; therefore, the proceedings
relating to these claims are void. Because there are no such proceedings, there is
no basis for awarding KCS reasonable and necessary attorney’s fees under section
37.009. KCS’s claim for attorney’s fees was ancillary to Devon’s claims, over
which the trial court lacked subject-matter jurisdiction. The trial court did not err in
dismissing all of these claims for lack of subject-matter jurisdiction. To the extent
this court reverses this ruling, I respectfully dissent.
/s/ Kem Thompson Frost
Chief Justice
Panel consists of Chief Justice Frost and Justices Jamison and Wise. (Wise, J.,
majority).
33
L.A. Tucker Truck Lines, Inc., 344 U.S. at 37–38, 73 S.Ct. at 69; Gantt, 208 S.W.3d at 30.
8